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Long-Term Care Costs

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As retirees live longer, many worry about outliving their savings. However, many older Americans haven’t planned for a looming expense: the cost of long-term care.

The median cost of a private room in a nursing home was $105,850, and in-home care costs were $53,768 to $54,912 annually, according to Genworth’s 2020 Cost of Care Survey. CNBC’s recent article entitled “Most retirees will need long-term care. These are the best ways to pay for it” says these costs vary by location.  This is one case where everything is NOT bigger in Texas.  Long-term care costs in Texas are typically lower than the national averages.  There are also differences in average costs between rural, urban, and suburban locations.

Although it’s hard to predict a retiree’s needs, the chances of requiring some type of long-term care services are high, about 70% for the average 65-year-old. Men typically need 2.2 years of care, and women may require 3.7 years.

Long-term care insurance may cover all or a portion of services. The premiums depend on someone’s age, gender, health, location and more. However, there’s a 50% chance someone won’t ever need their policy, the American Association for Long-Term Care Insurance estimates, and premium hikes can be costly. Premiums typically increase about 5%, every five years.

A hybrid long-term care policy is another option. These policies are part life insurance or an annuity and part long-term care coverage, but can have higher monthly premiums.

Seniors can buy a policy with an upfront payment, eliminating the risk of future premium increases and their heirs may receive a death benefit if they don’t need long-term care. However, it may be harder to compare prices for a hybrid long-term policy than standalone long-term care coverage.

Retirees with income and assets below certain thresholds may be eligible for long-term care services through Medicaid.  In Texas, these benefits are mostly limited to nursing home care, with only very limited Medicaid funds available for assisted living or in-home care.

Many families cobble together a network of family, friends, neighbors, non-profit organizations, and paid care to meet the needs of older loved ones.  Information and Referral programs at non-profit agencies such as The Senior Source and Metrocrest Services can assist elders with care coordination, benefits counseling, and other resources.

Reference: CNBC (Aug. 26, 2021) “Most retirees will need long-term care. These are the best ways to pay for it”

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